Correlation Between Barings Active and Fundvantage Trust
Can any of the company-specific risk be diversified away by investing in both Barings Active and Fundvantage Trust at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Barings Active and Fundvantage Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Active Short and Fundvantage Trust , you can compare the effects of market volatilities on Barings Active and Fundvantage Trust and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Barings Active with a short position of Fundvantage Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Fundvantage Trust.
Diversification Opportunities for Barings Active and Fundvantage Trust
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barings and Fundvantage is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Fundvantage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundvantage Trust and Barings Active is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Barings Active Short are associated (or correlated) with Fundvantage Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundvantage Trust has no effect on the direction of Barings Active i.e., Barings Active and Fundvantage Trust go up and down completely randomly.
Pair Corralation between Barings Active and Fundvantage Trust
Assuming the 90 days horizon Barings Active is expected to generate 2.69 times less return on investment than Fundvantage Trust. But when comparing it to its historical volatility, Barings Active Short is 1.28 times less risky than Fundvantage Trust. It trades about 0.08 of its potential returns per unit of risk. Fundvantage Trust is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,023 in Fundvantage Trust on August 28, 2024 and sell it today you would earn a total of 6.00 from holding Fundvantage Trust or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Fundvantage Trust
Performance |
| Timeline |
| Barings Active Short |
| Fundvantage Trust |
Barings Active and Fundvantage Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Fundvantage Trust
The main advantage of trading using opposite Barings Active and Fundvantage Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active position performs unexpectedly, Fundvantage Trust can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fundvantage Trust will offset losses from the drop in Fundvantage Trust's long position.| Barings Active vs. Versatile Bond Portfolio | Barings Active vs. Nuveen Minnesota Municipal | Barings Active vs. Ishares Municipal Bond | Barings Active vs. Multisector Bond Sma |
| Fundvantage Trust vs. Polen Global Growth | Fundvantage Trust vs. Polen International Growth | Fundvantage Trust vs. Ddj Opportunistic High | Fundvantage Trust vs. Ddj Opportunistic High |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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